Tips to avoid student loan debt

The interest rate on student loans today is twice what it was yesterday. It's now 6.8% up from 3.4% because of a political stalemate in Washington.

I hope this gives you the opportunity to think about the total amount of money being borrowed on student loans. If Congress strikes compromise and dials back interest rates, great. But the real problem is the runaway cost of college and borrowing for education.

I don't want you to be in a position for decades where you go to school and are burdened from your 20s through your 40s and maybe beyond with student loan debt.

There have been so many recent reports about the burden of college loan debt. For those who have already graduated, there is a high rate of delinquency and default. For those who are in college, the level of debt and the percent of students taking on loan debt are hitting record numbers.

I read in The New York Times that student loan debt is being called the "anti-dowry" because it hangs around your neck like an albatross in your 20s and 30s and makes you less of an attractive prospect for marriage.

Not too long ago the Consumer Financial Protection Bureau came out and said that private student loans stink. Just like I've always said!

A warning for parents and grandparents

Let me speak directly to parents first on the student loan issue. Do not feel guilty that the expenses of providing for your family are preventing or have prevented you from saving for your children's college education. Let go of that guilt. It's more important to save for your own retirement, because there are no scholarships, loans or work-study programs for that!

If you're a grandparent, do not sign for student loans for your grandchild. It's not a good way to show your love for your grandchildren.

Now a few words for the students. Do not convince yourself that a degree is worth any level of borrowing. If you must borrow, never borrow more for a 4-year degree than the entry level salary you expect to earn after having received that degree.

Community colleges, work-study options offer solutions

A lot of people pooh-pooh my idea of going to a community college for the first 2 years. Sure, you may not get a strong sense of campus when you go to a community college. But you will get an education in what's usually a more student-oriented environment than at a traditional college.

Then after 2 years, you can matriculate on to that traditional school and end up with only 2 years to pay for instead of 4 years. (Employers only look at the name of the college on your degree anyway, not where you started out.)

You can also work your way through school. The danger is that many people who work 30 or 40 hours a week to put themselves through school don't complete the degree. So you have to stay focused on the degree if you go this route.

I worked through all of grad school and through two-thirds of my undergraduate college by going to school at night. But I was an ambitious sort. I finished college in 3 years and graduate school in 1 year. Of course, I didn't have a lot of fun in college as a result! But I also didn't have to deal with how to pay for it either.

If all of what I've just said above still falls on deaf ears and you're still intent on borrowing, hear this: Never borrow any private student loan money. Only borrow what's permissible under the federal student loan program. Do not go to private lenders. Period.

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Clark Howard is a consumer expert whose goal is to help you keep more of the money you make. His national radio show and website show you ways to put more money in your pocket, with advice you can trust. View More Articles